OPTIMAL VALUE OF A PATENT IN AN ASYMMETRIC COURNOT DUOPOLY MARKET

Uday Sinha

No 245, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: We consider a mechanism for optimizing the value of a patent owned by an independent patent holder who is not a producer in the market. We consider two kinds of cost reducing innovations: “common innovation” and “new technology innovation” in a homogeneous good Cournot market with ex-ante asymmetric costs of production. We show that the value of the patent is maximized when the patent holder sells the patent to the efficient firm at a fixed payment who would further license the innovation to its rival. This patent sale dominates all other licensing mechanisms for both kinds of innovations.

Keywords: Patent sale; licensing; asymmetric firms; cost reducing innovation; auction; fixed fee; royalty, two part tariff (search for similar items in EconPapers)
JEL-codes: D43 D44 D45 L13 O32 O33 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2015-08
New Economics Papers: this item is included in nep-bec, nep-com, nep-ino, nep-ipr and nep-pr~
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Related works:
Journal Article: Optimal value of a patent in an asymmetric Cournot duopoly market (2016)
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